Perdue: Can’t ‘sugar coat’ Trump budget cuts to farm bill funding

WASHINGTON, May 24, 2017 - President Trump’s first full budget left few programs important to farmers untouched. The good thing for producers, rural communities and others who care about these programs is that this budget has no chance of surviving Congress.

Moreover, Agriculture Secretary Sonny Perdue, who wasn’t confirmed until late April, had nothing to do with developing the proposals, according to USDA’s Acting Deputy Secretary Michael Young, who was tasked with defending the budget on a conference call with reporters on Tuesday. “This is a process that happens through the Office of Management and Budget,” Young said when asked where the budget proposals originated.

The proposed staff cuts would be spread across the department, with Rural Development taking one of the biggest hits, dropping from 4,825 to 3,900 employees.

Crop insurance would be cut by $29 billion over 10 years with a $40,000 premium subsidy cap, a new means test and elimination of the Harvest Price Option for revenue polices.

Commodity programs would be hit with a tighter means test, too. Producers would be ineligible for either insurance premium subsidies or commodity program payments if they have adjusted gross incomes of more than $500,000 a year. There is currently an AGI limit of $900,000 on commodity programs only. “It is hard to justify to hardworking taxpayers why the federal government should provide assistance to wealthy farmers with incomes over a half a million dollars,” the budget says.

Key conservation and rural development programs would be gutted. There would be no new enrollments in the Conservation Stewardship Program and the Regional Conservation Partnerships Program, a top priority for the Obama administration, would be eliminated. Future enrollment in the Conservation Reserve Program, capped by law at 24 million acres, would be limited to continuous signup and grasslands.

Numerous popular programs across the Rural Development mission area would be eliminated, including Business and Industry loans and the Value-Added Producer grants, as overall funding to support Rural Business-Cooperative Service programs would be slashed from $157 million to just $12 million in 2018. “USDA has not been able to demonstrate that these programs meet the broader goals of reducing rural poverty, out-migration, or unemployment,” the budget says.

Entire programs elsewhere also were put on the block, including the Market Access Program, the Foreign Market Development Cooperator Program, and the Biomass Crop Assistance Program. “In a time of belt tightening, the government should not be subsidizing the advertising and promotion of commodities, or providing subsidies for the manufacturing of biobased products,” the budget says.

International food aid would be gutted as part of the administration’s “America First” principle. The flagship Food for Peace program, which delivers U.S.-grown commodities to needy countries, would be eliminated along with the McGovern-Dole school feeding program.

“The United States is the largest provider of emergency food aid, typically accounting for a third or more of all contributions,” the budget says in justifying killing Food for Peace. “As the United States refocuses assistance to the highest priority areas, the budget calls upon other donors to do their fair share.”

Much of the cost reduction in domestic food assistance – the SNAP cut is by far the biggest single reduction proposed to USDA spending – would come from requiring a state match for benefit costs. The match would rise from an average of 10 percent in 2020 to 25 percent by 2023. States, in turn, would be allowed to reduce benefits to lower their costs.

The overall budget should be read as a pitch to Trump’s conservative base and an indication of the influence of OMB Director Mick Mulvaney, a former Tea Party ally in Congress, and of experts from the Heritage Foundation, who got early appointments to the White House staff. Heritage has proposed to phase out commodity programs and end revenue insurance. While the budget would leave revenue insurance intact it would make the deep cuts proposed by Rep. Ron Kind, D-Wis., and other congressional critics of the program.

“The agricultural ‘safety net’ is simply out of control,” Heritage’s Daren Bakst said in a blog post. “Congress and the Trump administration now have a unique opportunity to use the budget process as an important tool to move agricultural policy in a commonsense direction. They should seize this opportunity.”

Agriculture Secretary Sonny Perdue, who only last week defended SNAP, crop insurance and rural development funding during a House Agriculture Committee hearing, will have to talk about the budget on Wednesday when he appears before the House Agriculture Appropriations Subcommittee. On Tuesday, Perdue gave the opening statement on a conference call with reporters and then left it to Young to field questions.

“I don’t think there is any reason to try to sugar coat this,” Perdue told the reporters, noting he was just beginning his fifth week on the job. “I’ve communicated with our team at USDA and just said, ‘Look, when times are tough, we just dig down and do more. And that’s what we’ll do here … I believe the people knew what they were doing when they elected President Trump.”

Lawmakers on Tuesday quickly distanced themselves from the cuts. Senate Agriculture Chairman Pat Roberts, R-Kan., said the budget that lawmakers will have to follow is the congressional budget resolution that will be considered later, not Trump’s proposal. “Ithink they went down to the bottom of the OMB basement and pulled out a file that said David Stockman on it, and pulled out all those things he wanted to do,” Roberts joked, referring to President Reagan’s budget-slashing budget director. “We’re just not going to do that.”

The ranking Democrat on the House Agriculture Committee, Collin Peterson, D-Minn., said the budget should be “a warning to people in rural America. For years, groups like the Freedom Caucus, Heritage Foundation and Club for Growth have been advocating for these exact policies as part of their goal to completely do away with farm programs. They are now closer to making this a reality than ever before.”

Peterson added, “I’m hopeful we can get past this ideology and make reasonable reforms as part of future farm bill debate, but this is not a good place to start.”

Farm groups registered their opposition to the budget in unusually strong terms. Zippy Duvall, president of the American Farm Bureau Federation, said the budget “fails agriculture and rural America.”

In addition to gutting crop insurance, the budget would “drastically reshape” conservation programs and “hamper the viability of plant and animal security programs at our borders and undermine the nation’s grain quality and market information systems,” he said. “It would stunt rural America’s economic growth by eliminating important utility programs and other rural development programs.”

Roger Johnson, president of the National Farmers Union, called the budget “an assault on the programs and personnel that provide vital services, research, and a safety net to America’s family farmers, rural residents and consumers.”

Ron Moore, president of the American Soybean Association, said, “By shredding our farm safety net, slashing critical agricultural research and conservation initiatives, and hobbling our access to foreign markets, this budget is a blueprint for how to make already difficult times in rural America even worse.”

David Schemm, president of the National Association of Wheat Growers, said that “proposing significant restrictions on crop insurance, commodity, conservation, trade, nutrition, and economic development programs is short-sighted and ignores the needs of rural America.”

The 106-page USDA budget summary is available here. Other documents detailing proposals for USDA and other departments and agencies are available at the OMB website.

This week’s guest on Open Mic is Ken Dallmier, President and COO of Clarkson Grain Company. While the global grain business is dominated by supply, demand and now trade wars, this Illinois-based company functions under a customer-focused mindset. Dallmier says this generation of consumer demand is dominated by a different set of social values leading to questions over the way food is produced and the prices they’re willing to pay. Sustainability, organic and non-GMO are providing farmers an income stream isolated from traditional market forces.

Department of Transportation Secretary Elaine Chao and Environmental Protection Agency Acting Administrator of the Andrew Wheeler recently announced their intent to reassess and correct the Corporate Average Fuel Economy standards.

The world of agriculture extends beyond what’s growing in your field or living in your barn, and here at Agri-Pulse, we understand that. We make it our duty to inform you of the most up-to-date agricultural and rural policy decisions being made in Washington D.C. and examine how they will affect you – the farmer, the lobbyist, the government employee, the educator, the consultant and the concerned citizen.